A firm combines factors of production like men, materials and machines to produce and sell goods or services for profit. The type of business organization depends on factors like size, capital needs, market competition and government regulations. Common types of organizations include private enterprises like sole proprietorships, partnerships, private limited and public limited companies, cooperative enterprises, and public sector enterprises like government departments and statutory corporations.
2. A firm is an ownership organization which combines the factors of production (men, material and machines) in a plant for the purpose of producing goods or services and selling them at profit. CONCEPT OF BUSINESS ORGANIZATION
3.
4.
5. Types of Ownership Private Enterprises Co-operative Sector Enterprises Public Sector Enterprises
7. Co-operative Sector Enterprises Producers Co-operative Society Housing Co-operative Society Consumers Co-operative Society Credit Co-operative Society
8. Public Sector Enterprises Government Department Statutory Corporation Government Company Statutory Board Or Commission
9.
10. Legal Liability : His legal liability covers all his possessions. The credit can collect his personal property.
11.
12.
13.
14.
15.
16.
17. Formation : Partnership can be formed either verbally or by written agreement. The written agreement is known as “ Partnership Deed ” .
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31. Distinction between Individual Ownership and Partnership Large Capital Limited Capital Capital : An agreement is required No agreement is required Formation : Minimum 2 Maximum 50 Individual Owner Membership : Partnership Individual Ownership Parameter
32. It is shared by partners Owner manage the business Management : Profit is shared among partners Owner enjoys the profit Profit : Risk spread among partners Individual Owner bear risk Risk : Necessary Not Necessary Registration :
33. Possible Not possible Division of labour : Small and Medium scale Small scale business Suitability : Partners can take decisions Owner must take decisions Decisions : Partners may reveal secrets Owner maintains the secret Secrecy :
34.
35.
36.
37.
38.
39.
40.
41.
42. Raising Finance : Funds can be taken from banks and finance corporations etc. in the form of loans, or by selling shares and debentures.
43. Managing the Business : The shareholders elect the directors to manage the business on their behalf. The board of directors only lays down the general policy and discusses major issues. The day-to-day business is carried on by the salaried manager or the Managing Director.
44. Organization Structure : Share holders Board of Directors Auditor Executive Committee Bankers General Manager Sales Purchase Accounting Production deptt. deptt. deptt. deptt.
45.
46. Private Limited Company : It can be formed by two or more members. The maximum number of members is limited to 50. The company is registered under the Indian Company’s Act, 1956. It enjoys a separate legal status, continuity of life, benefits of limited liability. Large capital raising power, business secrecy to certain extend.
47. Public Limited Company : The membership is open to general public. The minimum number of persons is seven and no upper limit. It is subjected to greater control and supervision of the government which protect the interest of the shareholders and the members of the public.
48.
49.
50.
51.
52. Comparison between Private and Public Limited Companies Minimum 7 Maximum no limit Minimum 2 Maximum 50 Limits to membership : Open to general public. Open to Private members. Membership : Public Limited Private Limited Particulars
53. Need minimum capital Start with any amount Minimum capital : Legal provision No legal provision Audit of Accounts : Possible Not possible Resale of shares : Required Not required Election of Directors :
54. 11% of net profits Less Remuneration of Directors : More strict Less Legal control : Minimum 3 Minimum 2 Number of Directors : End with only “Limited” End with “Private Limited” Name :
55. Distinction between Partnership and Joint Stock Company Minimum number of shareholders is 2, maximum is 50. Minimum number of partners is 2, maximum is 20. Liability is limited to the value of shares. Liability of members is limited. Joint Stock Company Partnership
56. Shares are transferable. Shares are not transferable. Managed by the elected board of directors. Managed by the partners. Large amount of capital is needed. Limited Capital. It has a legal existence. It has no separate legal entity.
57. It is governed by Indian Companies Act, 1956. It is governed by Partnership Act,1932. Smooth and efficient management is easy. Smooth and efficient management is difficult. It has large legal procedures. It has simple legal procedures. It has permanent existence. It has short life.
58. Definitions : A simple definition can be stated as, “ A co-operative society is a voluntary association of economically weak persons who work for achievement of their common economic objectives on the basis of equality and mutual service. ” CO-OPERATIVE ORGANIZATIONS
59. The International Labour Organization stated it as : “ A Co-operative organization is an association of persons who have voluntarily joined together to achieve a common economic end through the formation of a democratically controlled organization, making equitable contributions to the capital required and accepting a fair share of risks and benefits of the undertaking ” .
60. Mr. N. Barrow defined Co-operative Society as : “ A voluntary organization of persons with unrestricted membership and collectively own funds. Consisting of wage earners and small producers, united on democratic basis for the establishment of enterprises under joint management for the purpose of improving their household or business economy ” .
61. Co-operative spirit is the heart and backbone of a co-operative society. “ Each shall work for all and all for each ” is the motto of co-operation. Its main object is to promote self help and mutual assistance among men of moderate means and income, having needs and interest in common.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80. Distinction between Co-operative and Joint Stock Company Minimum 2 for Private Ltd. and 7 for Public Ltd. Minimum 10 Limits to membership : Under Companies Act. Under Co-op. Society Act. Formation : Joint Stock Company Co-operative Society Parameters
81. Socialist bias. Community interest. Large number of shareholders. Unity of purpose. No need for unity of purpose. Promote self-help and mutual assistance. Spirit of competition. Spirit of Co-operation. Fundamental Principles :
82. Limited. Limited. Liability : Shares are transferable. Shares are not transferable. Transfer of shares : Large capital. Limited. Capital : Wide spread membership Local or regional territory. Membership :
83. Democratic with unequal voting rights. Democratic with equal voting rights. Management : No special privileges. Special privileges. Privileges : Profit motive. Not profit motive. No limit on dividend. Maximum dividends on shares 12 p.c. Distribution of profit :
85. Distinction between Private Sector and Public Sector Owned and managed by Central or State Govt. Owned and managed by individuals. Profit motive is of secondary importance. Profit motive is of primary importance. Public Sector Private Sector
86. Absence of competition. Face competition in the market. Equitable distribution of wealth and income. It causes concentration of wealth. Large amount of capital is needed. Limited Capital. Large capital. Limited capital.
87. It undertakes risky ventures. It does not undertake risky ventures. Protect people from exploitation. Chances of exploitation of general public. It dominates in the production of producer goods. It dominates in the production of consumer goods.
88. Wastage of material and labour is maximum. Wastage of material and labour is minimum. It encourages industrial growth of under-developed regions. It leads to unbalanced growth of industries.
89. It has to play a key role to accomplish quick industrialization and rising standard of living of the people through developing key and basic industries. PUBLIC SECTOR ORGANIZATIONS
90.
91.
92.
93.
94.
95.
96.
97.
98.
99.
100.
101.
102.
103.
104.
105.
106.
107. Comparative Evaluation of Different Forms of Business Ownership Easier Very diffic-ult Not easy Easy, an agreement is needed. Easiest, No legal formalities. Ease of formation : Co-operative Society Public Ltd. Private Ltd. Partnership Individual Ownership Forms
108. Minimum 10 Minimum 2 Maximum no limit Minimum 2 Maximum 50 Minimum 2 Maximum 20 Single Membership: Compulsory Compulsory Compulsory Optional Not necessary Registration:
109. Limited Very large Large Moder ate Limited Capital: Limited Limited Limited Unlimi ted Unlimi ted Liability of members: Separate legal status Separate legal status Separate legal status No separate legal status No separate legal status Legal status:
110. Limited Very large Large Moder ate Limited Capital: Restricted Freely transferable Restricted With mutual consent At will Transferability of interest: Small and medium scale Large scale Medium scale Small and medium scale Small scale Suitability:
111. Limited Very large Large Moder ate Limited Capital: Limited to members Shared with public Shared by members Limited to partner Perfect Business secrecy: Comparatively short life Permanent existence Permanent existence Less stable Short life Stabil ity:
